Internet in Japan

In Japan, Nippon Telegraph and Telephone (NTT) planned a step-up process from dialup (56 kbit/s), ISDN(64 kbit/s), to fiber to the home (FTTH). Under this plan, NTT had been selling ISDN lines primarily toward private users while corporate users sometimes skipped ISDN entirely and immediately upgraded to the still-expensive FTTH service. In the late 1990s, Cable TV operators began offering their own broadband services, but relatively high initial installation cost and cheaper alternatives limited its spread.

Asymmetric Digital Subscriber Line service was started by a venture company, Tokyo Metallic in 1999. After this NTT started and some other companies followed. In 2001, SoftBank started ADSL (12 Mbit/s) service. It was a shocking event, because the price was around only 3000 yen (30US$), which was half the cost of other companies and aggressive marketing campaigns led to their capturing of large shares of the market. Competitors and Softbank each dropped prices in a price war and repeatedly readied higher speed services to entice customers (12 Mbit/s 24 Mbit/s, 50 Mbit/s). In 2004, Japan had the best cost to performance ADSL service in the world (50 Mbit/s, 35US$) which it held on to in the successive years.

At the same time, NTT and electric power companies expand FTTH areas. In most urban areas, people can use FTTH (100 Mbit/s, 50US$), but ADSL is still mainstream. However, large discounts and free installation have boosted adoptions. Many new apartments are built to accommodate FTTH service with little or no wiring. In 2005, Kansai Electric Power started 1 Gbit/s FTTH service at 8700yen (90US$).

In September 2000, the MIC (communications ministry) forced Nippon Telegraph and Telephone, the incumbent operator, to unbundle its copper local loop. The price was fixed considering the line costs were covered by vocal telephony. Alternative operators could only support incremental costs bond to newly offered functions. In the fiscal year of 2004, partial unbundling rates were 120¥ per month and 1,300¥ per month for total unbundling.

In 2000, rules for operators colocation inside NTT facilities and lines delivery terms were established. In 2001, NTT were required to unbundle their interconnection optic fibers between exchange points. Finally, It was forbidden for NTT East & NTT West to offer internet access services.

Softbank, a major Nippon ISP, launched in 2001 its DSL service "Yahoo! BB" and massively invest in DSL technology to become in 2003 the largest DSL operator before the incumbent.

In 2004, 52.1% of households had internet access, with more than half of these using broadband. [cite news
url = http://www.accessmylibrary.com/coms2/summary_0286-21861662_ITM
title = Broadband becomes Japan's major connection
work = Yomiuri Shimbun
date = 2004-07-06
accessdate = 2008-01-08]

In March 2005, DSL had more than 13.6 million customers. The concurrence of FTTH was stronger and stronger, with the arrival of operators like TEPCO (Tokyo Electric Power Company), allied to KDDI and NTT. Three million customers were wired with FTTH in March 2005 and it could supplant DSL in 2007 according to Yano Research ( [http://www.yanoresearch.com/pdf/FTTH_2005.pdf FTTH Market in Japan and its future prospects] , 1 September 2005).

The Japanese model of optic fiber deployment is difficult to compare to other markets. The last kilometre is often done in an aerial manner on pylons, shared between operators, even non-telco. This distribution technique reduces the vulnerability to earthquakes and lowers costs dramatically.

The unique problem facing Japan's broadband situation is that because of popularity of FTTH, operators struggle to maintain enough bandwidth to let users enjoy their service fully. Even the largest operators have capacities for only tens of gigabits even though customers with FTTH service may number in thousands if not more. This problem is further compounded by limits caused by router. The estimate of traffic based on the data collected at May 2007 by Ministry of Internal Affairs and Communications is approximately 720 Gbit/s combined and the report believes that by May 2008, the traffic will exceed 1 Tbit/s.

References